Foot Locker (FL) Q2 2025 earnings summary

Executive summary

• Total sales increased 1.9% year-over-year to $1,896 million, with comparable sales up 2.6% and gross margin expanding by 50 basis points.

• Net loss was $12 million (GAAP), or $0.13 per share; non-GAAP net loss was $4 million, or $0.05 per share, both impacted by a $0.09 per share non-recurring FLX Rewards Program charge.

• Strengthened comp trend through the quarter, with July as the strongest month and momentum continuing into August.

• Announced streamlining of international operations, including closure or transfer of stores in South Korea, Nordics, Greece, and Romania, and relocation of headquarters to St. Petersburg, Florida.

• Impairment charges of $9 million were recorded, primarily related to exiting underperforming operations in South Korea, Denmark, Norway, and Sweden.

Financial highlights

• Gross margin increased to 27.6%, up 50 basis points year-over-year, or 90 basis points excluding the FLX charge, driven by reduced markdowns and occupancy leverage.

• SG&A as a percentage of sales rose 130 basis points to 25.1% due to investments in technology, brand-building, and inflation.

• Cash and cash equivalents at quarter-end were $291 million; total debt was $445 million.

• Inventories down 10% year-over-year, supporting improved inventory turns.

• Free cash flow for the first half was $(6) million, a significant improvement from $(289) million in the prior year.

Outlook and guidance

• Full-year 2024 non-GAAP EPS guidance reaffirmed at $1.50 to $1.70.

• Comparable sales expected to increase 1% to 3%; total sales change expected between -1% and +1%.

• Gross margin guidance at 29.5% to 29.7%, slightly below prior guidance due to international and WSS promotional pressures.

• Capital expenditures expected at $275 million to $330 million, including ~$55 million in technology investments.

• Store count to decrease by 4% in 2024, with 30 new stores and 140 closures planned.